An employer must also complete the “residency certification form” for all out-of-state employees. For an out-of-state employee, the “residence PSD code” is 88000 and the “total resident EIT rate” is 0%. EIT taxes for out-of-state employees must also be withheld based on the employee`s workplace (“non-resident workplace EIT rate”), as well as the local service tax (“LST”) based on the PA work community. The employee must claim a credit if their local community outside the state also collects local income tax. Don`t let manual payroll tax calculations slow you down. Patriot`s payroll software ensures accurate tax calculations. Would you also like us to process your federal, state, and local tax returns and remittances? Sign up for our full payroll service. Get your free trial of both products today! But as you know, federal taxes aren`t the only taxes you withhold from employees` paychecks. Most states (but not all) also have state income taxes, and many have local income taxes. You must file and remit withholding tax within 30 days of the end of each calendar quarter. Do not meet this deadline if you have several sites and you have chosen to switch to a single collector (you must deposit and transfer monthly).
Follow these four (4) steps to meet local income tax requirements as an employer in PA: Use a single local tax collector. Employers with multiple jobs in PA State can remit their taxes to a single designated taxpayer. This was created to simplify tax payments and this process. This option is generally only used by very large employers with multiple workplaces and addresses. However, this requires the employer to pay taxes monthly rather than quarterly. The assigned tax collector distributes the same thing among the different municipalities. PA resident employees. Local employee income taxes in Pennsylvania are based on political divisions and are divided with the local school district based on the employee`s place of residence. The EIT tax is assessed by the city, municipality or municipality (political division) where the employee resides (for employees residing in PA) and is withheld by the employer and remitted quarterly to the collector of the employee`s place of residence (“resident municipality”). For AP residents, the employee`s resident municipality receives the full applicable EIT tax in almost all cases, even if they travel and work on other construction sites. The amount of EIT withheld is determined by comparing the total EIT rate of the employee`s residents with the municipality where the employee works (“EIT Rate for Non-Resident at the Place of Work”). Employers must always retain the higher of the two, 1.4% for the city example.
How should employers prevent the local EIT from regularly moving from one site to another and which does not have a workplace in the areas where it works? Use the information generated by the address finder application to register your business with the appropriate local tax collectors to obtain a local tax number. In most cases, the easiest way to register your business with a local tax collector is to do so directly through their website (as shown in the report generated by the address lookup app). You can also register your business by completing and filling out a paper version of the local income tax employer registration form. No later than the last day of February following the end of the calendar year, employers must complete Form W2-R for the Annual Reconciliation of Income Tax Withheld from Wages and file it with the relevant local tax collectors. Before we dive into payroll taxes in Pennsylvania, let`s review federal payroll taxes. Pennsylvania recommends that employers take the following steps to determine their local withholding income requirements: Paying taxes would be as described above for traveling employees.